Evergrande expanded aggressively to become one of China’s biggest real estate developers by borrowing more than $300 billion. Last year, Beijing implemented a new program known as “three red lines” to put a limit on the leverage used by real estate developers. Now, it is struggling to meet the interest payments on its debts.
On Wednesday, it is reported that Evergrande had negotiated privately with holders of an onshore bond to settle a 232 million yuan (equivalent to $35.9 million) coupon payment that is due Thursday. Evergrande also has an $83.5 million coupon payment due Thursday on its U.S. dollar bonds and hasn’t said if it plans to make that payment.
First of all, to Chinese financial market
Second contagion to global financial market
Third to Crypto Market
The document requires “strict monitoring, strict prevention of risks, prohibition of increments, and proper disposal of existing mining farms”. In addition to Bitcoin and Ethereum, this notice mentions Tether and USDT for the first time. It is not a surprise since China has been cracking down on cryptocurrency for months since early this year. But the FUD still spreads among Chinese crypto holders. They are worried that fiat-transaction will be stopped tomorrow, leading to panic selling off of USDT for RMB, the exchange rate fell from 6.44 to 6.8 RMB/USDT.
Binance and Huobi appeared to suspend the registration of new users in mainland China. Huobi has announced that it will retire existing Mainland China user accounts by Dec 31, 2021. It is reported by Twitter account Wu Blockchain that the Chinese community will move to DeFi. In the latest update, Alibaba stops selling mining machines.
In short, Gary Gensler expected that regulating cryptocurrencies would require working with other agencies, and that regulation would bring stability to the market and protections to investors.
Twitter enables crypto tips on iOS. Users can send tips to others with Bitcoin using Strike – a payments application built on the Bitcoin Lightning Network that allows people to send and receive Bitcoin. Strike is available to people in El Salvador and the U.S. (excluding Hawaii and New York). Another way to tip with Bitcoin is via a menu of payment options that include Square’s Cash App and Go Fund Me. In addition, Twitter said that it will support authentication for NFTs, or non-fungible tokens, by letting people connect their crypto wallets. A system for verifying the ownership and provenance of NFTs will likely add fuel to that practice and, in turn, reinforce the NFT ecosystem more broadly. The recent movements of Twitter indicate that the company is focusing on developing “creator economy”.
Last week was a week full of uncertainty for the crypto market when investors were afraid of contagion effects from the China real estate market and the Chinese crackdown on cryptocurrencies. The whole market went down with BTC and fell briefly below $40,000. The market recovered later last week with positive news from the US and China. The U.S Federal Reserve signaled that it could begin to reduce its bond purchases soon and raise interest rates as early as next year. (Increase interest rate will help to reduce inflation, which has increased in the past few months. Fed officials expected inflation to average 4.2 percent in the final quarter of 2021 before falling to 2.2 percent in 2022).
While the crypto market went down last week, Avalanche is one among few projects that had positive returns of 20% (as of September 24). The reasons for AVAX’s positive return are the arrival of AAVE and Curve this week, and the activation of Apricot Phase 4 (Snowman++ and Reduced C-Chain Fees). According to Avalanche founder, Emin Gün Sirer, this change makes Avalanche the cheapest (lowest fees per transaction) and fastest (lowest time to finality) chain.
The Snowman ++ will reduce the contention in the network by randomly enlarging the subset of validators that can produce a block at a given height over time. Contention on the Avalanche increased as with additional usage as the competition for extractable value on-chain intensifies with additional TVL.
The C-chain fee will be reduced with a new dynamic fee algorithm called “Moderato”. This algorithm targets a specific network utilization over time and adjusts the minimum fee any transaction must pay to be included in a block based on the amount of activity (“gas burned”) over the last 10 seconds. Since AP3 activation, the gas price has averaged ~98.2 nAVAX, a ~56% reduction from AP2.
Recently, Avalanche’s cross-chain bridge transaction activities have gradually decreased and may be affected by the Vee Finance attack. The losses on Vee Finance’s attack were 8804.7 ETH (around $26 million) and 213.93 BTC (around $9 million). This was the second attack targeting DeFi projects on the Avalanche network. On the 12th of September Zabu Finance lost ~$3.2M.
Cosmos (ATOM): The 7D returns for ATOM is 22.8%. Last week, Sommelier announced a research and development partnership with Mysten Labs to increase liquidity transaction speeds and launch smart contract applications on the Cosmos blockchain. Mysten Labs is the developer of Diem (Libra) and Nori for Facebook.
Celo, 7D returns of 45%, is another blockchain that announced its partnership with Mysten Labs. Following the integration, Celo will become the fastest EVM compatible blockchain in the world. In addition, Celo has announced key hires including Danielle Andrzejewski (from a16z) as head of commerce to focus on international business partnership development; Alberto Martin (from Google) as Celo’s head of product, Eric Nakagawa (from Facebook’s Novi) as head of developer relations.
dYdX and Perpetual Protocol lead the crypto market higher.
It is predicted that after the Chinese panic, money was withdrawn from Huobi (and other centralized exchanges) and moved to decentralized exchanges and derivatives including dYdX and Perpetual. 7D returns for dYdX and Perpetual Protocol are +56.25% and +36.17%, respectively. For the first time, dYdX is doing more trade volume than Coinbase. dYdX is Ethereum-based on the chain crypto derivatives platform founded by Antonio, after he left Coinbase